Coffee Day Global Ltd (CDGL), which owns and operates the popular Cafe Coffee Day chain, on Friday (September 6) said it has been facing a legal challenge under Section 7 of the Insolvency and Bankruptcy Code, 2016.

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The case has been brought against the company by IDBI Trusteeship Services Ltd and has been filed with the National Company Law Tribunal (NCLT) in Bengaluru. The lawsuit alleges that Coffee Day Global has defaulted on payments totalling Rs 228.5 crore.

In response to these allegations, the company said it is in the process of seeking appropriate legal counsel and fighting the case.

Last month, the National Company Law Appellate Tribunal (NCLAT) stayed an order of NCLT that directed the initiation of insolvency proceedings against Coffee Day Global Ltd.

Passing an interim order, a two-member tribunal of the Chennai Bench of the appellate tribunal, issued notices to the interim resolution professional and its financial creditor IndusInd Bank and stayed the operations of the order passed by the Bengaluru Bench of the NCLT.

The NCLAT said it has "found that there are arguable points involved in this appeal.” Therefore, it has issued a formal notice to the respondents who are already on caveat, enabling it to file its reply.

In 2022-23, CDGL's consolidated total income was Rs 920.41 crore. It had reported a loss of Rs 67.77 crore in the year.

As per the annual report of its parent firm Coffee Day Enterprises Ltd for FY22, CDGL owns 495 cafes in 158 cities and 285 CCD Value Express kiosks. There are 38,810 vending machines that dispense coffee in corporate workplaces and hotels under the brand.

Coffee Day Enterprises has been trying to get its finances in order after the death of founder-chairman V.G. Siddhartha in July 2019. It is paring its debts through asset resolutions and has significantly scaled it down from the time the trouble started.

(Edited by : Shoma Bhattacharjee)

First Published:Sept 8, 2023 6:33 PM IST